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Global Alliance for Incinerator Alternatives

November 2011


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Acknowledgements:The primary research and writing for this report was provided by Matt Leonard. The following individuals provided

assistance with research, writing, or editing: Barbara Warren, Brad Van Guilder, Doug Koplow, Jen Angel, Laurie

Stoerkel, Tracy Frisch, Burr Tyler, Christie Keith, Monica Wilson, Neil Tangri and Ananda Lee Tan.

www.no-burn.org

GAIA is a worldwide alliance of more than 650 grassroots groups, non-governmental

organizations, and individuals in over 90 countries whose ultimate vision is a just, toxic-free

world without incineration.

Global Alliance for Incinerator Alternatives

1958 University Avenue, Berkeley, CA 94704
http://www.no-burn.org/http://www.no-burn.org/http://www.no-burn.org/


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TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................................. 5

SCOPE OF REPORT ......................................................................................................................................... 7

KEY REPORT FINDINGS ................................................................................................................................ 10

Renewable Portfolio Standards: ............................................................................................................. 11

Case studies of local and state subsidies: Detroit, Michigan; California; New York; Maryland; Camden

County, New Jersy ................................................................................................................................... 13

FEDERAL SUBSIDIES AND POLICY SUPPORT FOR WTE INCINERATORS ....................................................... 19Renewable Fuel Standards (RFS) ............................................................................................................ 20

Federal Renewable Electricity Production Tax Credits (PTC) ................................................................. 20

Business Energy Investment Tax Credit (ITC): ........................................................................................ 21

U.S. Department of Treasury Renewable Energy Grants ........................................................................ 21

Advanced Energy Manufacturing Tax Credit (MTC)................................................................................ 22

Renewable Energy Production Incentive (REPI): .................................................................................... 22

Energy Efficiency and Conservation Block Grant Program (EECBG) ....................................................... 22

Clean Renewable Energy Bonds (CREBs) ................................................................................................ 23

Qualified Energy Conservation Bonds (QECBs) ....................................................................................... 23

U.S. Department of Energy (DOE) Loan Guarantee Program ................................................................. 23

USDA -Rural Energy for America Program (REAP) Grants and Loan Guarantees ................................... 24

Direct Federal Grants through Economic Development Administration ................................................ 24

DOE Loans, Bureau of Indian Affairs (BIA) Grants and Loan Guarantees ............................................... 25

HISTORY AND CONTEXT .............................................................................................................................. 25

The WTE incinerator sector and allied industries ................................................................................... 25

WTE Incinerator subsidies compared to other forms of electricity production: .................................... 27


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CONCENTRATION OF RISK IN THE WTE INCINERATOR SECTOR .................................................................. 28

Financial Risk ........................................................................................................................................... 28

Public Health Risk .................................................................................................................................... 29

Climate Risk ............................................................................................................................................. 29

Technology Risk I: Performance & Liability ............................................................................................ 30

Technology Risk II: Energy Generation .................................................................................................. 31

Facility Siting Risk .................................................................................................................................... 31

WTE INCINERATION AND DEFINITIONS OF RENEWABLE ENERGY .............................................................. 32

CONCLUSION ............................................................................................................................................... 36

ENDNOTES................................................................................................................................................... 37


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INTRODUCTION

While federal, state and civic lawmakers puzzle over how to address a growing national economic crisis,

corporate America continues to push for subsidies that gift them with hard-earned taxpayer money.

Meanwhile, the burdens of pollution, unemployment and poverty have reached critical tipping points.

This volatile scenario begs a close examination of the public subsidies handed over to the polluting

corporations that are its root cause.

This report outlines how waste-to-energy (WTE) incinerators the costliest and most carbon-

intensive energy corporations are poised to take advantage of taxpayer subsidies, unless fiscally-

responsible judgment prevails in federal and state policy arenas.

A 2007 energy subsidy paper by the subsidy-research organization Earth Track reveals that direct

subsidies such as tax credits, export subsidies and loan guarantees for U.S. energy companies have

amounted to far upwards of $75 billion per year.1 Earth Tracks Doug Koplow cautions estimates of U.S.

energy subsidies vary considerably - ranging from 200 million to 1.7 trillion dollars, depending on howthe subsidies are tallied, and which subsidies are counted.

2

Many dirty energy companies, such as clean coal, nuclear, biomass and waste-to-energy, have

lobbied policy makers under the guise of renewable energy promising to deliver energy security, jobs

and climate mitigation. Their trade associations and lobbyists continue to persuade lawmakers that

these toxic and expensive technologies merit support as energy alternatives. Policies such as the

California cap & trade bill3 and incentives such as state Renewable Portfolio Standards (RPS) are being

bent to serve the needs of these power companies.

The incinerator industry is at the fore of this effort. With 87 energy plants around the nation currently

burning around 33 million tons of municipal solid waste (MSW) per year, incinerators generates only a

tiny fraction (approximately 1700 MWh)4 of the electricity produced nationally by major players like coal

or natural gas. In efforts to secure renewable energy subsidies, the incinerator industry has branded

itself as waste-to-energy (WTE) plants, making the following misleading claims:

WTE incineration recovers energy embedded in waste streams

WTE incineration reduces climate pollution from landfills

By generating electricity, WTE incineration reduces emissions from fossil fuels

These claims lack scientific credibility, and clearly conceal a much larger story the incinerator industry

does not wish to share. Recycling and reuse save much more energy than can be generated through

incineration because manufacturing with recycled materials serves to reduce energy use throughout the

materials supply-chain, from extraction to waste. Less energy use means that recycling, composting and


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reuse also create much less climate pollution than incineration. Finally, WTE incinerators are not a viable

alternative to fossil fuels, because they emit more carbon dioxide per (CO2) unit of energy (2988

lbs/MWh) than coal-fired power plants (2249 lbs/MWh).5

Municipal solid waste has very low energy value due to its high (over 60%) organic content (food

discards, yard waste, paper, etc.). A majority of the balance includes fossil fuels products like plastic, andfossil-fuel intensive products like metal and glass. While burying waste in landfills is indeed a major

source of greenhouse gas (GHG) emissions and toxic pollutants, recent Life Cycle Analysis (LCA)

comparisons of both disposal practices show that WTE incinerators only come out ahead (with lower

GHG emissions) when they recover heat andwhen the landfill gas methane capture rates are low. 6

The truth about WTE incinerators is that their carbon-intensity, cost, health and environmental impacts

disqualify any claims this industry makes about being renewable. A recent study published in

American Economic Reviewfound that solid waste combustion has the highest ratio of negative

environmental and economic impacts (gross external damage) to benefits, among U.S. industries. 7

What is egregious about the incinerator industrys claims is that burning societys discards entails

destroying billions of dollars worth of precious materials from a finite resource base (paper, wood,

plastic, glass, metals and food discards) that could be recycled into the economy to create much-needed

local jobs in communities across the country.

By allowing WTE incinerators a seat at the energy subsidies trough, Congress and state legislators are

creating an economic barrier to the growth of a zero waste economy - where resources are recovered,

materials are put to best and highest end use, energy is conserved, pollution is vastly reduced, and

more jobs are created.

Nationally, less than 34% of municipal waste is recycled in the USA today, but cities such as SanFrancisco, Seattle, and Oakland have shown that diverting 75% or more of this waste is achievable.

Applying zero waste strategies such as recycling, reuse and composting in order to achieve a 75%

recycling rate nation-wide would generate over 1.5 million new jobs in collections.8 This critical

commitment would also serve to reduce vast amounts of climate pollution, equivalent to taking 50

million cars off U.S. roads, and reduce many forms of toxic and hazardous pollution.

Incineration is also the most expensive form of energy generation in the U.S., per unit of electricity

produced. The U.S. Energy Information Administration found that the costs of building WTE incinerators

are 60% higher than nuclear power, and the operating costs are ten times higher than coal. 9 These

massive costs are typically paid through waste disposal fees (e.g., tipping fees) charged to municipalities

and counties, where public money pays the bill. Not only do these communities shoulder the cost

burden of these facilities, which can be upwards of $500 million for a large WTE incinerator, they

frequently assume the risk associated with loans and debt service payments for the facility.


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Over a twenty-year period, the city of Detroit, Michigan paid out over $1.2 billion in costs and debt

servicing for their WTE incinerator, coming close to bankruptcy on three different occasions in that time.

Camden, New Jersey faced a similar crisis last year when they were unable to make their incinerator

bond payments.

In October 2011, Harrisburg, Pennsylvania10

became the largest city in the country to declarebankruptcy, due to its $300 million toxic debt from fixing and upgrading a WTE incinerator operated by

Covanta. Local environmental justice groups forewarned the city of Harrisburg of this outcome when

they made this financial decision eight years ago.11 The Harrisburg incinerator sits next to a city housing

project, where working poor and people of color face the lions share of the incinerators air pollutants.

This is a trademark of the incinerator industry: seeking the path of least resistance and cost, when

looking to locate their toxic technologies. So, not only do people of color and working poor communities

have to deal with higher rates of disease and respiratory illness due to incinerator emissions, they also

have to actually pay to be subjected to this pollution through their taxes, waste fees, and utility rates.

Dr. Robert Bullard, one of the countrys leading environmental justice scholars and advocates, calls this

U.S. Energy Apartheid, and believes that energy policies today are driving a new wave of racist

industry initiatives,12 where new waste and biomass incinerator proposals are largely being built in poor

white, African American, Latino and Indigenous Peoples communities. Bullards 2007 report, Toxic

Waste and Race at Twenty, illustrates how people of color and the poor in the U.S. are more likely to

have toxic waste disposal facilities like incinerators sited in their communities today than they were over

20 years ago. 13

So while our energy policymakers seek to make more public funds available for toxic, climate polluting

and exorbitant garbage burning plants, they should be keenly aware that these subsidies also fortify

those invisible barriers in society today walls that determine whether your children have a muchhigher chance of getting asthma or cancer, based on the color of your skin14 and size of your paycheck.

SCOPE OF REPORT

Burning Public Money for Dirty Energypresents an overview of how U.S. energy policies are creating a

range of subsidies for municipal waste incineration (MSW) projects, including emerging waste burning

technologies of gasification, pyrolysis and plasma arc incineration. This report also identifies incentives

for a wider spectrum of industries that are starting to identify as waste-to-energy projects, such as

landfill gas to energy systems and anaerobic digestion (or biogas) facilities. Developers promoting wastetechnologies have increasingly positioned their proposals as energy generation projects in order to take

advantage of these new energy subsidies and incentives.


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These energy subsidies do not account for the massive externalized costs from dirty energy, such as the

cost of public health impacts, the cleanup costs after destructive mining, and the disposal of toxic ash

from power plants. Nor do these estimates include a number of other upstream subsidies given to

resource extraction industries that distort the markets in favor of energy companies pursuing high-risk,

toxic and costly technologies such as nuclear power, clean coal, or waste-to-energy. For a review of

these upstream subsidies, a presentation by Doug Koplow for the Product Stewardship Institute titled

Undermining Sound Resource Use through Subsidies to Primary Materials and Waste Management is

available athttp://earthtrack.net/files/uploaded_files/Recycling%20subsidies_Koplow_r.pdf

Burning Public Money for Dirty Energyfocuses primarily on the energy production sector, looking at the

production of both electricity and fuel as the primary outputs for most WTE incinerator projects. An

examination of policies that indirectly subsidize or otherwise contribute to the proliferation of waste

such as excess packaging and single-use disposables is outside the scope of this report.

This report does not examine a range of federal subsidies designated for biofuels but increasingly

attractive to some waste to fuel projects, such as theVolumetric Ethanol Excise Tax Credit (VEETC),

Volumetric, the Volumetric Butanol Excise Tax Credit(VBETC), andtheCellulosic Production Tax Credit(CPTC). This report also does not examine Small Producer Production Tax Credit for liquid fuels from

waste. Tax-exempt bonding for WTE and landfills and accelerated depreciation for WTE facilities, are

shown through anecdotes of local and state subsidies.

For a broader overview of federal interventions in the energy sector, it is worth reading two additional

reports:

1. The 2008 edition of a study published bythe U.S. Energy Information Administration: Federal

Financial Interventions and Subsidies in Energy Markets.15

2. A critique of the former EIA study by Earth Track that details how the numbers in the U.S. EIA

study are low: EIA Energy Subsidy Estimates A Review of Assumptions and Omissions.16

Other resources on state energy policies and subsidies include a 2007 National Governors Association

report entitled Clean and Secure Energy Actions that provides a fairly up-to-date overview of state-level

policies across the energy sector, and a database of state incentives for renewables and efficiency found

online athttp://www.dsireusa.org/ .
http://earthtrack.net/files/uploaded_files/Recycling%20subsidies_Koplow_r.pdfhttp://earthtrack.net/files/uploaded_files/Recycling%20subsidies_Koplow_r.pdfhttp://earthtrack.net/files/uploaded_files/Recycling%20subsidies_Koplow_r.pdfhttp://www.dsireusa.org/http://www.dsireusa.org/http://www.dsireusa.org/http://www.dsireusa.org/http://earthtrack.net/files/uploaded_files/Recycling%20subsidies_Koplow_r.pdf


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Incineration and Waste-to-Energy

The term incineration refers to various waste treatment technologies that burn commercial,

residential, industrial or hazardous waste. Municipal solid waste (MSW) incineration converts

discarded materials, such as paper, plastics, metals and food scraps, into a variety of waste

products, including bottom ash, fly ash, combustion gases air pollutants, wastewater, wastewater

sludge and heat. There are 87 MSW incinerators in the U.S. Most of these are used to generate

electricity.

Biomass incineration uses organic feedstocks such as wood chips, construction debris, forest waste,

agriculture waste and municipal waste, although biomass is loosely applied to mixed waste

streams. Biomass incinerators waste resources that would better be conserved, composted, or

returned to the earth. For a full report on public subsidies for biomass incineration, see:

http://www.nobiomassburning.org/BAP/Home.html

In recent years, the incinerator industry has tried to expand their sector by marketing theirtechnologies as waste-to-energy (WTE) facilities, leveraging claims of reduced greenhouse gas

emissions and clean energy, to seek public subsidies. Other waste industries such as landfill gas

and anaerobic digestion plants have begun to adopt the term waste-to-energy in order to qualify

for similar subsidies. Some companies like Covanta use the term energy from waste (EFW).

These marketing efforts conceal the many environmental problems with WTE incinerator and

landfill technologies and the loss of recyclable materials when they are burned for their Btu value

rather than recycled back into the economy for a higher end use.


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KEY REPORT FINDINGS

Having waste-to-energy (WTE) counted as a renewable energy creates a lifeline for an

expensive industry that requires public funds to gain a competitive advantage over other

approaches to waste management.

Most federal energy subsidies that benefit incineration are actually meant to support the

development of real renewable energy sources such as wind, solar and micro-hydro,

which should not have to compete against dirty energy for the same funding.

Although WTE projects currently access only a portion of the renewable energy subsidies

available, these policies set a precedent for increased financial support for the industry

and shape the political, technological, economic, and legal environment.

Federal energy and climate policy is slow moving, but such policies are moving forward

much faster at the state level. The State Renewable Portfolio Standards (RPS) is a

powerful driver for the expansion of the incinerator industry, in addition to opening the

door for a range of state and federal subsidies.

Subsidies of all types are rapidly evolving in the energy sector. Perhaps one of the most skewed markets

in the global economy, the energy sector is inundated with vast amounts of government interventions,

and support at every level. Historically, most of these subsidies have been for traditional fossil fuels and

nuclear production. However, since the passage of the Energy Policy Act of 1992, incentives for

alternative and renewable energy production have steadily grown.

There are nearly a dozen major federal policies that provide incentives for WTE projects. Almost all of

these are broad policies that were created under the auspices of advancing alternative energy sources

and they are not focused on WTE per se. In general these incentives more heavily impact other forms of

energy (such as wind and solar). Indeed, since the WTE industry has seen stagnant growth in the past

decade, many of these subsidies are not actively providing much federal funding to WTE projects. But

they still create the political, technological, legal, and economic environment to foster the growth of the

WTE industry, and this environment will shift to material support in the coming years without clean

energy, zero waste and environmental justice advocates campaigning to change the landscape.

Most experts agree that comprehensive federal legislation on climate and energy issues is forthcoming.

While a series of Energy Policy Acts have created strong direction on energy, these directions willundoubtedly shift once federal climate legislation is passed. State-based policies are in a similar

situation, however many states are leading the way with more ambitious and comprehensive climate

and energy regulations.


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A number of states17 (California, Hawaii, Indiana, Virginia, Maryland, and others) have already included

benefits for WTE incineration in their energy policies. And while some states address waste stream

issues more effectively in other policies (for example, waste reduction policies), their inclusion in energy

policies provides the most advantages for accessing public funding.

STATE AND LOCAL SUBSIDIES FOR WTE INCINERATOR PROJECTS

Renewable Portfolio Standards:With the failure of federal climate legislation in 2009,

18and the absence of a federal renewable

electricity standard, state renewable portfolio standards (RPS) are now the governing regulatory

programs that mandate the production of renewable energy. Taxpayer and ratepayer subsidies

make it possible for the mandates to be fulfilled by providing the funding to build and operate new

renewable energy generating sources.

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The RPS is one of the biggest drivers of alternative energy. Compliance with these standards takes

various forms, but in general are legal requirements that a certain percentage of electricity produced in

a state be from renewable sources. State programs define qualifying technologies differently, or in

varying classes. Qualifying facilities are authorized to sell electricity and renewable energy credits

(RECs), with each qualifying facility being awarded one REC per MWh of power produced each year.

Current market value in the Regional Greenhouse Gas Initiative (RGGI) for the Northeast states exceeds

$20. The average value of a REC in 2010 was between $20 and $40 dollars.20 At this rate, a large 90

Megawatt WTE Incinerator can earn about $23 million per year by selling RECs, depending on the going

price. This is calculated as follows:

Using the Covanta Delaware Valley WTE Incinerator in Chester, Pennsylvania, as an example, that would

be 90 MW x 24 hours x 365 days = 788,400 x 30.00 =$23,652,600 annually.

As of July 2010, 29 states (and Washington DC) have a mandated RPS, and 7 more have goals, which

are currently voluntary but may become legally binding in the future.

There is a Federal Renewable Fuel Standard, and some waste-to-energy qualifies under the RFS. There

are also other state grants, loans and incentives for biomass incinerators, where waste incineration is

often included in the state RPS definitions of biomass. A comprehensive database is maintained via the

DSIRE website. 21


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Table 1: State RPS Overview2223

STATE RPS Targets MSW

qualifies?

Anaerobic

Digestion

qualifies?

Landfill

Gas

qualifies?

Biomass

qualifies?

Arizona 15% by 2025 No Yes Yes Yes

California 33% by 2020 Yes* Yes Yes Yes

Colorado 30% by 2020, 10% for co-

ops and large munis

No Yes Yes Yes

Connecticut 23% by 2020 Yes Yes Yes Yes

Delaware 20% by 2020 No Yes Yes Yes

District of

Columbia

20% by 2020 Yes Yes Yes Yes

Hawaii 40% by 2030 Yes Yes Yes Yes

Illinois 25% by 2025 No Yes No Yes

Iowa 105 MW Yes Yes No yes

Kansas 20% by 2020 No Yes Yes Yes

Maine 30% by 2000, New 10% by

2017

Yes No Yes Yes

Massachusetts 22% by 2020, new 15% by

2020, increases 1% /year

No Yes Yes Yes

Maryland 20% by 2022 Yes Yes Yes Yes

Michigan 10%+ 1100MW by 2015 Yes Yes Yes Yes

Minnesota 25% by 2025 Yes Yes Yes Yes

Missouri 15% by 2021 Yes Yes Yes Yes

Montana 15% by 2015 No Yes Yes Yes

Nevada 25% by 2025 Yes Yes Yes Yes

New Hampshire 23.8% by 2025 Yes Yes Yes Yes

New Mexico 20% by 2020, 10% by 2020

for co-ops

No Yes Yes Yes

New Jersey 22.5% by 2021 Case by case Yes Yes Yes

New York 29% by 2015 No Yes Yes Yes

North Carolina 12.5% by 2021, 10% by 2018

coops and munis

Case by case Yes Yes Yes

Ohio 25% by 2025 Yes Yes Yes Yes

Oregon 25% by 2025, 5-10% for

smaller utilities

Yes Yes Yes Yes

Pennsylvania 18% by 2021 Yes Yes Yes Yes

Rhode Island 16% by 2020 No No No Yes

Texas 5880 MW by 2015 No Yes Yes Yes

Washington 15% by 2020 No No No Yes

Wisconsin 10% by 2015 Yes Yes Yes Yes


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Case studies of local and state subsidies

Detroit, Michigan24

Detroits incinerator has pushed the city to the brink of bankruptcy on three separate occasions. The

economic impact has included cutting key public services,including city worker jobs,in order to mitigate

plummeting municipal bond ratings.25

Detroit is home to one of the worlds largest WTE incinerators (with a capacity of over 3600 tons per

day). In its first twenty years of operation, this facility has cost Detroit residents over $1.2 billion dollars

in debt service payments alone. Over these years, Detroit spent over $1 billion more for trash disposal

than if they had never built the incinerator, and sent the trash to landfills to be buried.

On October 8, 2010 the then-owner Covanta Energy closed the incinerator as a financial failure. Then on

November 22, 2010 Atlas Holdings of Connecticut bought the incinerator as well as the Detroit Thermal

steam loop, claiming that the combined system could be financially viable. Atlas Holdings formed Detroit

Renewable Energy with three subsidiaries Detroit Renewable Power (the trash incinerator), DetroitThermal, and Hamtramck Power Services.

On December 17, 2010 the Greater Detroit Resource Recovery Authority (GDRRA) awarded a no-bid 11-

year contract for waste disposal to Detroit Renewable Power. As of February 2011 the incinerator has

been operating only one of its three furnaces, burning about 1,500 tons of trash per day or about 40% of

its full operating capacity. Throughout its twenty-plus year history the incinerator has never operated at

more than about 65% of its full operating capacity.

Atlas Holdings, the new incinerator owner, is seeking several state subsidies, as shown in the following

chart.

State Incentive Estimated Value

Brownfield Michigan Business Tax (MBT) Credit: (based on an eligible

investment of approximately $32.8 million)

Waste to Energy Facility

Detroit Thermal Facility

$4,105,500

$325,000

Pollution Control Property Tax Exemption (20 years) $920,000


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PA 328 Property Tax Abatement (Personal Property; 12 years) $2,924,000

Michigan Business Tax (MBT) Credits and Other Tax Savings

Industrial Personal Property Tax Relief (12 years) $1,190,000

Sales Tax Exemptions (Initial Qualified Investment) $1,134,000

MBT Compensation Credit (12 years) $737,000

MBT Investment Tax Credit (Initial Qualified Investment) $2,864,000

MBT Research and Development Credit (Initial Qualified Investment) $48,000

Total Value of Proposed Incentives $14,272,500

Incentives Profile for Atlas Holdings, LLC (Michigan Economic Development Corporation)

The Brownfield MBT Credit is not based on land restoration, but the less common claim of restoration of

obsolete assets. The Detroit Brownfield Redevelopment Authority initially approved this credit. But

after broad public opposition organized by local coalition Zero Waste Detroit, the Detroit City Council

voted to reject the Brownfield tax credits entirely. The $325,000 tax credit for Detroit Thermal was

approved last spring but the $4.1 million for the incinerator was rejected by a super majority vote of 6-

3. Given the public backlash, no action has been taken on their request for a $75 million bond issue from

the state. As of November 2011, Detroit Renewable Power has approached the city to seek approval for

the Brownfield Credits once again.

Current subsidies that Detroit Renewable Power has been awarded include the Federal Tax Credit for

generating electricity from a Resource Recovery Facility and Renewable Energy Credits under Michigan's

Renewable Portfolio Standard (RPS). The Michigan RPS recognizes existing incinerator capacity but no

new facilities.

California

Waste Incineration qualifies in the California RPS in a limited way. The RPS arbitrarily includes only one

of the three WTE incinerators in the state (which are housed in environmental justice communities in

Long Beach, Commerce and the Central Valley).

The state RPS also allows waste gasification, but onlyif the facility has no emissions of any kind,

including greenhouse gases. To date this has precluded any gasification facilities from obtaining formal


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status under the California state RPS. However there is currently a debate between state agencies and

public interest organizations over the legality of a RPS pre-eligibility status that was granted to a

proposed plasma arc incinerator that would be operated by a company called Plasco. The company

admits that there would be emissions, which thus makes it ineligible according to state law. The

California Energy Commission, despite the state law, awarded the pre-eligibility status. The plasma

incineration project is meeting stiff opposition from the farm worker community of Gonzales, where the

company wants to build.

In September of 2011, Governor Jerry Brown signed into law a statewide recycling benchmark of 75% by

the year 2020. Recycling is already a strong player in the California economy, creating over 125,000 new

jobs in recent decades. Between state RPS goals of 30% renewable electricity by 2020, the new

mandate, and the cap and trade mechanism that came out of AB 32, it remains to be seen whether the

state will can keep its commitment to the development of a just and resilient recycling/zero waste

economy, or whether these laws will instead serve to expand burn and bury practices.

New York State

Covanta Energy has applied to the NY Public Service Commission (PSC) to be included in the state

Renewable Portfolio Standard (RPS). Over 2000 people and organizations submitted comments to the

PSC in opposition. The Attorney General and a trade organization representing wind and solar

businesses are also in opposition. The opposition is around the use of renewable energy credits to

support dirty energy, and concerns that this would divert funds from clean, renewable energy projects.

NY State funding for incinerators came from a pot of environmental funding for closing outdated

landfills (the hundreds of landfills that predated modern standards and the 1988 NY Solid WasteManagement Act) and also funding for recycling. Over time, recycling programs have received a small

fraction of the grant support that incinerators and landfills received. As in a few other states, NY

ratepayers are charged on each and every utility bill with a systems benefit charge (SBC), which is used

to support energy efficiency and renewable energy. While citizens groups have objected that too much

support goes to utility companies rather than community organizations to implement these programs,

this money has not yet been used for dirty energy.

In upstate NY, Washington and Warren Counties spent more than $5.5 million in 2009 to subsidize the

Hudson Falls incinerator. Owned by the Warren/Washington County Industrial Development Authority,

and operated by Wheelabrator (a subsidiary of Waste Management Inc.), this debt-plagued incineratorhas saddled residents with exorbitant bills for debt service, operating losses, and other expenses.

Under a deal approved by the two county boards of supervisors two decades ago , despite tremendous

citizen opposition, local taxpayers are legally obligated to pay off the construction debt and cover the


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operating losses of a privately run trash incinerator in Hudson Falls. The incinerator has continuously

required public subsidies since the day it opened in 1992. The two counties are also bound by long-term

contracts to pay above-market disposal fees ($69 a ton) at the incinerator for the trash they generate.

Meanwhile, the tipping fees charged to the waste corporations supplying the incinerator with the most

trash have dropped as low as the teens in recent years, due to a "shortage" of trash. In November2011, Wheelabrator Hudson Falls LLC will purchase the incinerator for the sum of $3.13 million, as

agreed in its 2003 operating contract.

In 2009, Washington County taxpayers had to pay $1.75 million as their share of a 2008 incinerator

shortfall.26 This payment was required to meet debt service, operation & maintenance costs,

Wheelabrator profits, as revenues from tipping fees and the sales of electricity were insufficient . Such

subsidies have taken precedence over funding recycling in this rural county of 63,000people. The county

has no money for a recycling coordinator or for public education about recycling. In 2010, the Board of

Supervisors cut $300,000 in recycling equipment costs from the county budget and attempted to reduce

hours and staffing at transfer facilities. Warren and Washington Counties have some of the lowest

recycling rates in the state. The need to keep feeding the incinerator, which was built to burn more than

three times the garbage that the two counties produce annually -- provides a powerful disincentive to

recycling and waste reduction programs.

100 miles downstream, on the Hudson River, Dutchess County pays several million dollars a year to

Covanta Energy, which operates an incinerator in Poughkeepsie. Disposal fees at this incinerator are so

high that local officials have talked about imposing a flow control law to capture all the trash from the

countys 300,000 residents and adding boilers capacity to accommodate the extra trash. Available data

has suggested that the county currently recycles only about 11 percent of its waste. The county doesnt

expect to pay off its incinerator debt until 2027, when the plant is over 40 years old.

In 2009 a Green Ribbon commission recommended that Dutchess County commit to a 70 percent

recycling goal and an incinerator phase-out within two to four years. The Dutchess County Incinerator

has been the subject of ongoing investigative reporting in the Poughkeepsie Journal, where the

following information appeared in a May 2009 article.27

Based on an independent report commissioned by the County, it describes the incinerator as

inefficient, inexpensive and in debt. It was built with $40 million in bonds and received a state

grant of $13.4 million. Its current bond debt of $49 million extends to 2027. It has been

referred to as a dinosaur by county legislators. In 2008 it took in $11 million in tipping fees,

and $4.2 million in electricity revenues. However it still needed a $3.5 million subsidy from thecounty to break even. The County has budgeted a larger amount for 2009-- $6.3 million.

In 2011 Taylor Biomass Energy, LLC, which is being built to burn municipal solid waste as well as some


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waste wood, was awarded a $100 million loan guarantee by the U.S. Department of Energy under

Section 1603 of the Recovery Act (stimulus program).

The facility, which uses unproven technology, also received a pass from the New York State Department

of Environmental Conservation (DEC). The DEC decided to exempt the Taylor incinerator from its own

incinerator regulations and allowed the project to proceed, requiring an application for a Title V permitin the future. This process severely limited public scrutiny of the project.

Maryland

Maryland is a key battleground state. On top of the three existing waste incinerators, it is the only state

that has two new proposals for conventional mass-burn incinerators Frederick County (Wheelabrator)

and Energy Answers International (Baltimore), as well as a proposal to triple the capacity of the Hartford

Incinerator.28

In the summer of 2011, Governor Martin OMalley of Maryland signed state incinerator bills that

provided WTE incinerators a Tier 1 status in Marylands RPS, despite broad public opposition from

state environmental and public health advocates.

The state's three existing incinerators in Baltimore (Operated by Wheelabrator), Harford (Operated by

Energy Recovery Inc.) and Montgomery County (Operated by Covanta) currently qualify for "Tier 2"

renewable energy credits under the state RPS. Tier 2 credits are worth half of what top-tier credits sell

for from solar, wind and other Tier 1 projects. The Montgomery trash burner earned $21 million in 2010

on the electricity it produced, while getting another $430,000 by selling its renewable energy credits.

Upgrading to Tier 1 could bring in an additional $240,000 a year, according to a legislative analysis.29

Assuming the other WTE incinerators receive the same amount proportional to their MW size, the Tier 1

RECs for these facilities would be as stated in the table below.

Maryland WTE Incinerators

Capacity

(MW) Annual Subsidy

Montgomery Dickerson 68 $ 240,000

Baltimore BRESCO 60 $ 212,471

Proposed Frederick incinerator 45 $ 158,824

Proposed Baltimore incinerator 140 $ 494,118

TOTAL 313 $ 1,105,412


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Like New York, Montgomery County has a System Benefit Charge that represents approximately 70% of

the county system revenues. This charge is essentially a pre-paid fee collected on the property tax bill. If

the owner fails to pay this charge, the county can enforce payment through foreclosure (similar to if the

owner had failed to pay property taxes).30

According to Brenda Platt of the Institute for Local Self-Reliance, the proposed Frederick County garbageincinerator, which would cost over $500 million to build and is designed to burn up to 1500 tons of

garbage per day, is roughly 25 times more expensive than a similarly sized recycling facility in Elk Ridge,

MD. The proposed Frederick incinerator would be financed with public debt, and appears already to be

crowding out a legitimate Tier 1 renewable energy generator. An anaerobic digestion facility that would

process food waste and support greenhouse agriculture in Frederick County is having challenges

because both would compete for some of the same materials.

A recent report by the Environmental Integrity Project31 found that Marylands three existing WTE

Incinerators produced more pollution per hour of energy than each of Maryland's four largest coal-fired

power plants. These emissions include CO2, as well as toxic pollutants such as mercury and lead.

Camden County, New Jersey

New Jersey is well known for having covered incinerator debt payments for its counties in the past,

mainly due to the fact that these incinerators were built at the states direction. All five of New Jerseys

waste incinerators ran into financial problems in the 1990s when they did not receive sufficient

quantities of waste to operate. The state, which loaned much of the money for the construction of these

facilities, had to bail out the incinerators with US$1billion in taxpayer money (taken from the states

1999 general budget).32

In the last decade New Jersey doled out another $509 million to a dozen of these counties to help them

cover their incinerator debt. Camden County received about 30% of these funds for its ailing waste-to-

energy incinerator, which is owned by a subsidiary of the Foster Wheeler company. The Pollution

Control Financing Authority of Camden County (PCFACC) owns the land on which the plant operates.

In late 2010 the PCFACC approached state officials again when they did not have enough funds to cover

their annual $25 million dollar incinerator bond payment. According to a lawyer for the Authority, the

state is in the business of bailing out private bondholders.33 New Jersey environmental groups have

demanded that privately owned incinerators be allowed to compete in an open market without state

subsidies, and that if they are unable to remain financially solvent, they be should shut down. State

officials have pressed for the authority to restructure the debt, but the PCFACC say they can't because

its credit ratings are junk.


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FEDERAL SUBSIDIES AND POLICY SUPPORT FOR WTE INCINERATORS

As widespread momentum for renewable energy continues to grow, the WTE industry hopes to

capitalize on this momentum by painting themselves as green and renewable. This is arguably the

lifeline for an industry plagued with widespread public opposition, high costs, and the uptake of moreefficient, competing practices such as recycling and composting. While public opposition to WTE

incineration persists, industry recognizes that inclusion of WTE in both the popular political rhetoric and

the legal definitions of renewable energy is its strongest bet for new support. In addition to shifting

the economic field by qualifying such projects for myriad renewable energy subsidies, incinerator

proponents recognize that if WTE can gain wide acceptance politically, the regulatory hurdles and

permitting processes that follow may become easier for the industry at every level.

While numerous other subsidies and incentives may impact the waste sector, there are a number of

programs that many waste-to-energy projects are directly eligible for. Many of these were either

created, or greatly expanded under the 2009 Stimulus package, or American Recovery and Reinvestment

Act (ARRA), which provided $1.64 billion in stimulus funding to the renewables program and $800million of that to advanced biofuels program (for which WTE incinerator projects potentially qualify).

The following are the most direct, and most substantial federal policies that effectively encourage

waste-to-energy incinerator projects:

Renewable Fuel Standards (RFS)

Federal Renewable Electricity Production Tax Credit (PTC)

Business Energy Investments Tax Credit (ITC)

U.S. Department of Treasury - Renewable Energy Grants

Advanced Manufacturing Tax Credit (MTC)

Renewable Energy Production Incentive (REPI) Energy Efficiency and Conservation Block Grant Program (EECBG)

Clean Renewable Energy Bonds (CREBs)

Qualified Energy Conservation Bonds (QECBs)

U.S. Department of Energy - Loan Guarantee Program

U.S. Department of Agriculture - Rural Energy for America Program (REAP) Grant

U.S. Department of Agriculture Biorefinery Assistance Program

Note: Stacking subsidies is one of the primary financial strategies pursued by expensive, high-risk energy

projects seeking to lure local government contracts and hedge their investments against risk.


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Renewable Fuel Standards (RFS)The original Federal Renewable Fuel Standard (RFS1) was created with the Energy Policy Act of 2005,

mandating 7.5 billion gallons of renewable fuel (typically ethanol) be blended into gasoline by 2012. The

Energy Independence and Security Act of 2007 (EISA) amended this program t (RFS2) to increase the

volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008

to 36 billion gallons by 2022; established new categories of renewable fuel and set separate volume

requirements for each one; and required the EPA to apply lifecycle greenhouse gas performance

threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than

the petroleum fuel it replaces. 34

While none are commercialized, several waste technologies are being developed that could qualify

under the RFS2, from landfill methane capture projects that can create pipeline-quality natural gas from

biogas, to various biomass technologies and projects. In general, the biogenic portions of MSW and

construction waste qualify as a renewable feedstock. Both new thermal conversion (gasification,

pyrolysis) and chemical (digestion, fermentation etc) technologies can qualify as well.

In addition to the Federal RFS, at least 9 states also have a state RFS, generally requiring ethanol or

renewable fuel to be blended with gasoline, or mandating biodiesel production. The mandates of the

RFS may be an economic driver of waste-to-energy technologies and projects, but in general, specific

subsidies come from other federal programs such as the ITC and PTC it replaces.

Federal Renewable Electricity Production Tax Credits (PTC)3536The Production Tax Credit (PTC) lowers the federal income taxes of qualifying tax-payingowners of

renewable energy projects. The credit is based on the kilowatt-hours (KWh) generated by a qualifying

facility, and the definitions (and credit amounts) for various facilities change under Congressional budgetcycles. Smaller developers may not have the tax liability to fully take advantage of the PTC, so it is

common for larger investors to partner on projects, and receive the bulk of the tax credit in exchange

for better investment terms.

The PTC was first enacted with the Energy Policy Act of 1992, and most recently the American Recovery

and Reinvestment Act of 2009 created the option for taxpayers to take a federal business energy

investment tax credit (ITC) or receive a cash grant from the U.S. Treasury Department in lieu of taking

the PTC, which is generally equal to 30% of eligible costs. Projects that receive other federal grants, tax

credits, tax-exempt or subsidized energy financing may have a reduced PTC.

The following chart shows the credit amounts for Tier 1 and Tier 2 resources (1.5/KWh and .75/KWh

in 1993 dollars, adjusted for inflation).


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Resource Type 2010 Credit Amount

Wind 2.2/KWh

Closed-Loop Biomass 2.2/KWh

Open-Loop Biomass 1.1/KWhGeothermal Energy 2.2/KWh

Landfill Gas Capture 1.1/KWh

Municipal Solid Waste 1.1/KWh

Qualified Hydroelectric 1.1/KWh

Marine and Hydrokinetic (150 kW or larger) 1.1/KWh

MSW incineration and Landfill Gas to Energy are both considered Tier 2 technologies, receiving half of

the full Production Tax Credit. There is an active push from the industry to define WTE as Tier 1. The

duration of the credit is generally 10 years after the date the facility is placed in service, but there are

exceptions based on initial date of service.

According to the Energy Recovery Council (an incinerator industry association), the 87 WTE plants in the

United States 37 generate 17 billion kilowatt hours of electricity annually. If all of these producers

received the PTC, the tax credits would amount to $187,000,000 per year.

Business Energy Investment Tax Credit (ITC):38Under the American Investment and Recovery Act of 2009 (ARRA), the ITC is a credit in lieu of the PTC,

which reduces the federal income tax for owners of qualifying projects based on the capital investment

of the project. These credits are earned when the equipment is placed into service, and can reduce theupfront costs of renewable energy projects. Project owners cannot claim both the PTC and the ITC.

The ITC credits are equal to 30% of the project expenditures, with maximum credits varying based on

the technology used. Estimates are that the ITC costs $285 million annually.

U.S. Department of Treasury Renewable Energy GrantsUnder the ARRA qualifying energy projects may elect to receive a Treasury grant instead of the ITC equal

to 30% of project capital costs. These grants can only be taken in lieu of the PTC or ITC, not in

combination. 39 This program is commonly known as the 1603 Program, and once again, is only

applicable to tax-paying entities.

The Treasurys list of awarded projects showed that as of October 2011, $9.1 billion in grants had been

awarded, and overwhelmingly for wind projects. It does not appear that any municipal solid waste


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incinerators received funding from this program, although new projects are eligible. Three projects

awarded a total of $5.3 million were listed as Trash Facility, and all are biogas (anaerobic digestion)

projects in Ohio. 1.5% of the awarded grants went to biomass projects (15 projects totaling $133

million), and 0.4% of the awarded grants went to Landfill Gas projects (19 projects totaling $36 million).

It appears all the funded biomass projects were open-loop, not surprising since open-loop projects are

only eligible for half the PTC value (1.1/KWh), while closed-loop are eligible for the full ITC value.40

Advanced Energy Manufacturing Tax Credit (MTC)Also a program under the 2009 ARRA, the MTC authorizes the Treasury to provide $2.3 billion in tax

credits to qualified investments in advanced energy projects, for new, expanded, or re-equipped

domestic manufacturing facilities. The MTC provides a 30% credit (similar to the PTC and ITC), but

specifically to manufacturing technologies and projects, rather than specific end-use production

projects. Applicants will be jointly reviewed by the DOE and the IRS, and be judged on the expected

commercial viability, expected job creation, reduction of emissions and pollutants, innovation, and

timeline for commercialization. 41

While the MTC wouldnt necessarily fund an incinerator project directly, it might fund the underlying

technology development. The parameters for eligible projects are quite broad, and commercial

application of various technologies may have multiple applications (i.e. gasification for multiple

feedstocks, potentially including MSW).

Renewable Energy Production Incentive (REPI):42The REPI program was created by the Energy Policy Act of 1992, and amended with the Energy Policy

Act of 2005. It is essentially a parallel program to the Production Tax Credit (PTC), but for local, state,

and tribal, public utilities, rural electric cooperatives, and native corporations. The structure and credit

system of the REPI is similar to the PTC, paying per KWh of production. However, where REPI values

fluctuate much more widely, and have caps, the PTCs do not, and therefore are much more valuable.

Qualified technologies include landfill gas, solar, wind, geothermal, biomass, livestock methane,

ocean/tidal, anaerobic c digestion, and fuel cells using hydrogen derived from eligible biomass facilities.

MSW is not considered qualifying under this program but closed-loop biomass facilities are. REPI is

administered by the Department of Energy, and annual funding in 2008 was $4.5 million dollars.

Congress did not allocate 2010 funding for REPI.

Energy Efficiency and Conservation Block Grant Program (EECBG)The DOE also administers the Energy Efficiency and Conservation Block Grant (EECBG) program,

providing grants to local governments, tribal governments, states, and U.S. territories to reduce energyuse and fossil fuel emissions, and to implement energy efficiency improvements. The ARRA appropriated

$3.2 billion for the EECBG Program for fiscal year 2009, but no further funds were allocated for 2010.

Activities eligible for funding include landfill gas capture or reduction, and material conservation

programs including source reduction and recycling.43


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Clean Renewable Energy Bonds (CREBs)44

Clean renewable energy bonds (CREBs) are used to finance renewable energy projects at a 0% interest

rate. In general, the same qualifying technologies for the PTC qualify for CREBs, including landfill gas,

biomass, municipal solid waste, and anaerobic digestion. CREBs may be issued by electric cooperatives,

government entities (states, cities, counties, territories, Indian tribal governments or any political

subdivision thereof), and by certain lenders. The borrowing entity pays only the principal on the bond,and the bondholder receives federal tax credits in lieu of the traditional bond interest.

The Energy Policy Act of 2005 created CREBs as a financing mechanism for public sector renewable

energy projects, allocating $800 million. The Tax Relief and Health Care Act of 2006, made available an

additional $400 (all old CREBs). TheEnergy Improvement and Extension Act of 2008 allocated $800

million for new CREBs, and theAmerican Recovery and Reinvestment Act of 2009 allocated an

additional $1.6 billion for new CREBs, for a total new CREB allocation of $2.4 billion. 45

Qualified Energy Conservation Bonds (QECBs)46

QECBs were authorized by the Energy Improvement and Extension Act of 2008, and are a tax credit

bond similar to CREBs, but issued by state, local, and tribal governments. While the funds are federal,

applicants do not need to go through an approval process from the Treasury, rather the Treasury issues

bonds to states based on population, and then states issue them primarily to local governments, and to

some private entities.

2008 allocation was $800 million, and the ARRA of 2009 expanded the volume to $3.2 billion. Eligible

projects include landfill gas capture, biomass, MSW incineration, and anaerobic digestion.

U.S. Department of Energy (DOE) Loan Guarantee ProgramThe Energy Policy Act of 2005authorizes the Department of Energy to issue loan guarantees to eligible

projects that "avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse

gases" and "employ new or significantly improved technologies. Lending guidelines accept open- and

closed-loop biomass project, municipal solid waste, landfill gas capture, and anaerobic digestion.

The American Recovery and Reinvestment Act of 2009 expanded the loan guarantee program to include

$30 billion energy systems, biofuels, and electric power transmission projects. At least $500 million is for

cutting edge biofuels projects, which potentially include many WTE facilities. 47

In August of 2010, the Taylor Recycling Facility in Montgomery, NY was the recipient of a $100 millionloan guarantee. 48 This project will be a gasification facility with a capacity of 500 tons per day of

municipal solid waste, 450 tons per day of construction waste, and 100 tons per day of wood waste. It is

expected to generate 20 MW of electricity as well as pipeline-ready syngas.49
http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.1424.enr:#_blankhttp://thomas.loc.gov/cgi-bin/query/z?c110:H.R.1424.enr:#_blankhttp://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf#_blankhttp://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf#_blankhttp://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf#_blankhttp://thomas.loc.gov/cgi-bin/query/z?c110:H.R.1424.enr:#_blank


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USDA -Rural Energy for America Program (REAP) Grants and Loan

GuaranteesAs part of the Food, Conservation, and Energy Act of 2008, Congress converted the Federal Renewable

Energy Systems and Energy Efficiency Improvements Program, into the Rural Energy for America

Program (REAP). REAP is administered by the United States Department of Agriculture (USDA), and

primarily provides grants and loan guarantees for energy efficiency improvements and renewableenergy systems to agricultural producers and rural small businesses.

Congress has allocated funds in the following amounts per fiscal year (FY): $55 million FY 2009, $60

million FY 2010, and $70 million FY 2011 and FY 2012. This totals $255 million through FY 2012.50Of the total REAP funding available; approximately 88% is dedicated to competitive grants and loan

guarantees for energy efficiency improvements and renewable energy systems. These incentives are

available to agricultural producers and rural small businesses to purchase renewable energy systems

(including systems that may be used to produce and sell electricity) and to make energy efficiency

improvements. Funding is also available to conduct relevant feasibility studies, with approximately 2% of

total funding being available for these studies. Eligible renewable energy projects include wind, solar,biomass and geothermal; and hydrogen derived from biomass or water using wind, solar or geothermal

energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may

not exceed $25 million. The combined amount of a grant and loan guarantee may not exceed 75% of the

projects cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated

to grants of $20,000 or less. The USDA likely will announce the availability of funding for this component

of REAP through a Notice of Funds Availability (NOFA).

The USDA will also make competitive grants to eligible entities to provide assistance to agricultural

producers and rural small businesses to become more energy efficient and to use renewable energy

technologies and resources. These grants are generally available to state government entities, local

governments, tribal governments, land-grant colleges and universities, rural electric cooperatives andpublic power entities, and other entities, as determined by the USDA. These grants may be used for

conducting and promoting energy audits; and for providing recommendations and information related

to energy efficiency and renewable energy. Of the total REAP funding available; approximately 9% is

dedicated to competitive grants for energy technical assistance.

A proposed biofuels demonstration facility in Florida obtained $75 million in financing backed by the US

Department of Agriculture 9003 Biorefinery Assistance program in August 2011. The INEOS Bio facility

plans to use yard and household waste to generate energy and ethanol fuel.

Direct Federal Grants through Economic Development AdministrationA more direct federal subsidy of $1.8 million was given to a waste-to-energy business incubator in the

form of a community block grant from the Economic Development Administration of the Department of

Commerce. The grant was given in 2010 to the Missouri Center for Waste to Energy, a project of the


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State Fair Community College in Sedalia, MO, and private companies including ProEnergy Services and

Waste Corp. of Missouri.51

DOE Loans, Bureau of Indian Affairs (BIA) Grants and Loan Guarantees

The Bureau of Indian Affairs (BIA), an agency of the U.S. Department of the Interior, has alreadyprovided $584,000 to the Oneida Seven Generations Corporation (Oneida) for a pyrolysis gasification

project on tribal lands. The U.S. Department of Energy (DOE) is currently evaluating whether to

authorize a loan of up to $2 million in Federal funds through Wisconsins State Energy Program, as well

as an additional loan guarantee through BIA of up to $19 million.52

HISTORY AND CONTEXT

The WTE incinerator sector and allied industriesThe management of municipal waste in the U.S. has historically been shouldered by local governments,

with the help of numerous private contractors that collect, transport, sort, bury and burn waste. Over

the last few decades this diverse business community has been consolidated, and both vertically and

horizontally integrated into a handful of large national waste disposal firms that dominate this sector.

As land prices and availability raised the cost of landfills over the years, a large number of cities turned

to constructing trash incinerators. The siting of incinerators and hazardous waste landfills in the 1960s

led to some of the early environmental justice protests within a broader civil rights movement.

Following the creation of the national Clean Air Act, and increasing public awareness of industrial air

pollutants, waste incinerators became an iconic symbol for environmental and public health organizingaround the country. Between 1982 and 1997, over three hundred new incinerator proposals were

stopped by public opposition in the U.S. from community organizing in environmental justice

communities to national toxics campaigns run by groups like Greenpeace. Due to these widespread

grassroots efforts, no new waste incinerator has been built in the U.S. since 1997, and hundreds of new

incinerator proposals have been rejected or stalled.

With the emergence of climate and energy policies in the U.S. (2005 -2006) the incinerator industry has

staged a significant comeback, revisiting many of the communities and government offices they

unsuccessfully courted in the past. Traditional mass-burn incinerators form the vanguard of this sector,

which now promotes itself as waste-to-energy (WTE). Of the 87 WTE incinerators currently operatingin the U.S., two companies, Covanta Energy and Wheelebrator (a subsidiary of Waste Management),

control over two-thirds of the facilities and over three quarters of the total waste burned. Covanta runs

44 of these incinerators and is trying to establish a global presence through incinerator projects in

Canada, China, Mauritius and the EU.


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In recent years a host of new, staged incineration technology companies have emerged. Touting

themselves as greener technologies, these companies are made up of gasification, pyrolysis and plasma

arc vendors 53. While these capital-intensive thermal conversion technologies have been used in other

industry sectors, effort to introduce these into the WTE sector has been largely experimental. No

commercially operational (or viable) waste gasification, pyrolysis or plasma arc incinerators exist in

the U.S. today. A handful of pilot projects using these technologies have been unsuccessful at

demonstrating their ability to prevent pollution, reduce waste and produce energy in a cost effective

manner.54

In addition to existing traditional WTE Incinerators and the new staged incinerator technologies, a

number of other waste industries have begun closing ranks with the traditional incinerator facilities, in

an effort to qualify for the same subsidies. These include:

Landfill gas to energy projects (LFGTE): these projects are primarily designed to capture

methane emissions from landfills. As landfills are one of the leading sources of methane, a

greenhouse gas that is 72 times more potent than carbon dioxide, state agencies have

prioritized support for these energy projects as a climate mitigation effort. However, zerowaste and clean energy advocates have warned that such investments only serve to exacerbate

the landfill methane problem, as a large amount of the methane continues to escape in the

form of fugitive emissions. These experts suggest that diverting the organic waste content to

composting and anaerobic digestion (or biogas) plants would be a more effective prevention.

Biomass Incinerators: over 200 biomass incinerators currently operate in the U.S., burning

waste wood, construction debris, railway ties, municipal waste, forest industry waste and

industrial agriculture waste in facilities much like waste incinerators. Over 300 new biomass

incinerator proposals currently exist, posing similar economic, pollution and public health

threats as waste incineration55. Biomass industry lobbyists have coupled their efforts with the

WTE Incinerator lobby, and these groups often use the terms biomass and WTEinterchangeably.

Anaerobic Digestion (biogas) is widely acknowledged as the most effective and clean

production of energy from organic waste streams. However, the development of biogas faces

challenges associated with many of the organic waste feedstocks proposed, such as:

o Sewage sludge that embodies many toxic and hazardous compounds

o Factory farm waste and industrial agriculture waste us of which perpetuates a

reliance on supply from major unsustainable and harmful industries.

In addition to the waste sector industries, a number of other firms have jumped onto the WTE

bandwagon, including venture capital and private equity firms - capital providers that seek particularlyhigh returns; private waste consultants; combustion engineering firms; and, municipal utility

cooperatives. This broad array of WTE proponents have begun sharing strategies for securing energy

subsidies, leveraging public financing and buffering risk, as described in this 2011 biomass industry

workshop:


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Discover how well-planned and organized biomass projects can get funded today by leveraging

government programs, tax equity and municipal financing to overcome the current dearth of

traditional capital. From pre-development capital to project debt financing and equity

investment, find out how a biomass project with a realistic capital structure can significantly

improve its odds of succeeding.

WTE Incinerator subsidies compared to other forms of electricity

production:56Depending on the set of assumptions and parameters used, statistics on subsidies can reflect differing

results. The data in this report is largely from the 2008 Energy Information Administration (EIA) study

titled Federal Financial Interventions and Subsidies in Energy Markets 2007.57

Some of the subsidy

amounts in this report, particularly those of the nuclear power industry, were identified as being low

due to certain assumptions and omissions by the authors of the report. More about the contested

figures in this study can be found in the Earth Track report: EIA Energy Subsidy Estimates A Review of

Assumptions and Omissions, authored by Doug Koplow, March 2010.

In general, WTE incineration receives the smallest amount of annual federal subsidies compared to

other energy production, both on a total aggregate amount, but also on a per-unit basis for energy

produced. However, as MSW has only recently been considered a renewable resource, subsidies are

expected to increase and the WTE incinerator industry may increasingly be eligible for existing subsidies

that they may have not yet accessed. In addition, the growth and maturity of the renewable sector as a

whole, pending climate and/or energy legislation, and increasing political trends to reduce or eliminate

fossil-fuel subsidies may vastly change this equation in the near future.

Table 2 Federal Subsidies for Electricity Production, 2007

ENERGY TYPE: FY 2007 Net Generation

(billion KWh)

Total Federal

Subsidies (million $)

Subsidy per unit of

Energy ($/mWh)

Coal 1,946 854 0.44

Natural Gas 919 227 0.25

Nuclear 794 1,267 1.59

Biomass 40 40 0.89

Wind 31 724 23.37

Solar 1 14 24.34

Landfill Gas Capture 6 8 1.37Waste-to-Energy 9 1 0.13


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CONCENTRATION OF RISK IN THE WTE INCINERATOR SECTOR

Energy companies have traditionally sought to stack public subsides as a risk management strategy.

Over the last decade, hundreds of proposals for waste incineration facilities have been stopped across

the country as a result of grassroots organizing and community advocacy. No new commercial

incinerator has been constructed since 1997 due to public opposition, which is based on identifiedhealth risks, high costs, technological malfunctions, false and misleading claims by incinerator vendors,

and the preference for waste reduction practices such as recycling and composting.

The following profiles of inherent risk contribute to the overall reputational riskassociated with waste

incineration. These are the core issues we need to educate our lawmakers on - to ensure that OUR

dollars are NOT made available to such high-risk industries. These are also significant deterrents for

private financial institutions looking to enter into financing arrangements with WTE incinerator

companies.

Financial RiskMunicipal solid waste incinerators are the most expensive form of energy generation in the U.S. The

capital costs are double that of coal power plants and over 60% higher than nuclear. Waste incinerator

operations and maintenance costs are ten times greater than coal and four times greater than nuclear.58

Often costing upwards of half a billion dollars to build, many incinerators have also required hundreds of

millions of additional spending on upgrades for the latest pollution control technologies. Since waste

management is the responsibility of local government, all these costs are eventually borne by the public.

Table 1, Capital Cost Estimates for Electricity Generation Plants for Selected Technologies

Technology/Fuel Nominal Facility

Capacity (kW)

Capital Cost ($/kW) Fixed O&M ($/kW-yr) Variable O&M

($/MWh)

Advanced Pulverized

Coal

650,000 3,167 35.97 4.25

Advanced

Nuclear/Uranium

2,236,000 5,339 88.75 2.04

Waste Incineration 50,000 8,232 373.76 8.33

Photovoltaic/Solar 150,000 4,755 16.70 0

Onshore Wind 100,000 2,438 28.07 0Table from U.S. Energy Information Administration (Department of Energy), Updated Capital Cost Estimates for Electricity Generation Plants,

November 2010. http://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdf

Incinerators are a risky investment for municipalities. In October 2011, the city of Harrisburg, PA voted

to file for bankruptcy due to its outstanding incinerator-related debt of over $300 million. Harrisburgs

annual incinerator debt payments are $68 million, larger than the city's entire operating budget.59

Similarly, Detroit taxpayers have been saddled with over $1.2 billion debt from constructing and

upgrading the worlds largest waste incinerator.60 As a result, residents have had to pay high trash

disposal fees of over $150 per ton. The city could have saved over $55 million in just one year if it had
http://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdfhttp://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdfhttp://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdfhttp://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdf


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never built the incinerator. For a fraction of these costs, investments in recycling, reuse and

remanufacturing would create significantly more business and employment opportunities.61

Public Health Risk

Even the most technologically advanced incinerators release thousands of pollutants that contaminateour air, soil and water. Many of these pollutants enter the food supply and concentrate up through the

food chain. Incinerator workers and people living near incinerators are particularly at high risk of

exposure to dioxin and other contaminants.62

In newer incinerators, air pollution control devices such as air filters capture and concentrate some of

the pollutants; but they do not eliminate them. Modern pollution control devices such as baghouse

filters do not prevent the escape of hazardous emissions such as ultra-fine particles.63 Ultra-fines, or

nano-particles, are too small to be effectively captured, and can penetrate deep into the lungs; yet they

are currently not regulated or monitored by the U.S. EPA. It is estimated that airborne particulates cause

the deaths of over 2 million people worldwide each year.64In the U.S., communities of color, low-income

communities, and Indigenous Peoples' communities are exposed to a disproportionate burden of such

toxins.65

Climate RiskDue to the low calorific (energy) value of municipal waste, WTE incineration is the most carbon-

intensive form of energy generation, producing more CO2 (2988 lbs/MWh) per unit of electricity than

coal power (2249 lbs/MWh).66 Contrary to industry claims that their plants serve to reduce significant

emissions reductions from landfills and fossil fuels, WTE incinerators are major climate polluters.

However, the greatest global warming impact of incinerators and landfills is the fact that these

technologies destroy valuable materials, which could otherwise be recycled or composted. According to

the U.S. EPA, WTE incinerators and landfills contribute far higher levels of greenhouse gas emissions and

throughout their lifecycles than source reduction, reuse and recycling of the same materials. 67

Incineration also drives a climate changing cycle of new resources pulled out of the earth, processed in

factories, shipped around the world, and then destroyed in incinerators and landfills. A 2009 study by

the EPA concluded that up to 42% of U.S. GHG emissions are generated in the production, use and

discard of goods and materials, and this could be significantly reduced through recycling and

composting.68

In addition, recycling is one of the most cost-effective strategies that can be pursued to combat climate

change: Avoiding one ton of CO2 emissions through recycling costs 30% less than doing so through

energy efficiency, and 90% less than wind power.69


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Implementing a comprehensive national waste reduction, reuse, recycling and composting program

would cut greenhouse gas (GHG) emissions by the equivalent of taking half the nations cars off the

road, or shutting down one-fifth of the nations coal-fired power plants.70

Table from U.S. EPA data: Greenhouse Gas Emissions from Incineration and Coal Plants

U.S. EPA, http://www.epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html

Technology Risk I: Performance & LiabilityEven with inadequate regulations and monitoring, waste incinerators are frequently found to violate

pollution control limits. Incinerator operators in the U.S. are currently paying millions of dollars in fines

and court settlements for breaches of emissions laws. In May 2011, Wheelabrator (a subsidiary of Waste

Management) agreed to pay $7.5 million to three Massachusetts municipalities to settle an

environmental lawsuit from the state Attorney General. The settlement was for environmental

violations and defrauding communities that paid for safe waste disposal.71

Covanta has had multiple emissions settlements in recent years. In 2010, Covanta shut down an

incinerator in Connecticut after the state discovered excessive dioxin emissions, which resulted in a July

2011 settlement of $400,000 with the Connecticut Attorney General. In 2010, Covanta settled a New

Jersey lawsuit with the Ironbound Community Corporation and Greenfaith for hundreds of Clean Air Act

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violations.In November 2009, Covanta settled for $355,000 with the Connecticut Attorney General72 for

excessive dioxins emissions at an incinerator.

These problems are not limited to the U.S. In December 2010, a waste incinerator in Crymlyn Burrows in

Wales, U.K., was shut down for repeatedly breaching dioxin emission limits. In Iceland, incinerators have

been identified as the source of widespread contamination of meat and dairy products.

Gasification, pyrolysis, and plasma incinerators have a dismal track record plagued by malfunctions,

explosions, and shutdowns. The Thermoselect gasification incinerator that was located in Karlsruhe,

Germany one of the largest facilities of the type in the world shut down permanently in 2004 after

years of operations problems and financial losses totaling over 400 million Euros.

Technology Risk II: Energy GenerationDue to the low calorific value of waste, incinerators are only able to capture small amounts of energy

while destroying large amounts of reusable materials. This fundamental inefficiency is what makes

incinerators the most expensive and carbon-intensive source of electricity. While older incinerators

generate electricity at very low efficiency rates of 19-27%, a 2004 UK study73

found that conversionefficiencies of new incineration technologies are even lower.

For example, an entire year after operations commenced in 2009, a new waste to energy incinerator

in Dumfries, Scotland had yet to produce energy to the national grid. 74 Similarly, in Utashanai, Japan,

plasma arc company Alter NRG acknowledged that the plasma arc incinerator has been able to generate

only a nominal amount of energy.75 This was also the case in 2010 at Plascos pilot plasma arc facility

in Ottawa Canada, where the incinerator was only able to burn one third of its built capacity.76

Conversely, zero waste practices such as recycling and composting save three to five times the amount

of energy produced by waste incineration.77 When taken together, the amount of energy wasted in the

U.S. by not recycling aluminum and steel cans, paper, printed materials, glass, and plastic is equal to the

annual output of 15 medium-sized power plants.78

Facility Siting RiskSince 1997, no new commercial-scale WTE incinerators have been built in the U.S. largely due to

community organizing efforts that have created broad public opposition amongst local stakeholders. To

date, no commercial gasification, pyrolysis, or plasma incinerators handling municipal solid waste are in

operation in the United States. In recent years, hundreds of WTE Incinerator proposals for both mass

burn and staged incinerators have been killed or stalled in over a dozen states and jurisdictions,

including Minnesota, California, Rhode Island, Indiana, New York, Massachusetts, Georgia, North

Carolina, South Carolina, Florida, Illinois, Washington, Wisconsin, Maryland, Vermont, Pennsylvania, and

the U.S. Virgin Islands.

79

Legal advisors to the WTE industry warn their clients that the biggest barrier to permitting and finding a

site for a WTE incinerator project is the presence of local environmental justice (EJ) groups that are able

to organize community opposition to such projects. Community groups that have stopped these
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industry proposals in the past are usually willing to do so again, despite company schemes to return

under a different brand name, and with revised schematics showing new and improved technologies.

WTE INCINERATION AND DEFINITIONS OF RENEWABLE ENERGY

Despite industry public relations campaigns to rebrand incineration as a renewable energy, the

contents of municipal solid waste are not renewable. Additionally, the combustion technologies used

to burn waste for energy do not constitute a clean, safe or sustainable practice. MSW contains plastics

derived from fossil fuels, as well as metals, glass and other non-organic compounds. MSW also contains

food waste, yard waste, and paper that are from biomass resources. There is growing debate about the

impact of biogenic carbon emissions, and new studies indicate that biogenic carbon emissions are not

carbon neutral, as described on page (See text box below for more on biogenic and fossil emissions).

The Intergovernmental Panel on Climate Change, U.S. federal policies and agencies, and state policies

and agencies greatly differ on whether energy from waste incineration should be considered renewable

or not. This classification is one of the most important decisions for WTE projects, determining ifincinerators are eligible for incentives and subsidies, and changing the popular and political discourse

around them. There is no clear policy consensus on how to classify WTE projects. If incineration gains

broad recognition as renewable energy, the incinerator industry will greatly benefit from a political and

public relations standpoint, as well as gaining access to existing subsidies and spawning new ones.

Intergovernmental Panel on Climate Change (IPCC): While the IPCC is more concerned with overall

human-induced (or anthropogenic) global warming emissions rather than specific fuel sources, their

classification of waste incineration is relevant. The IPCC is clear that incinerating biomass materials

cannot automatically be considered carbon neutral - recommending that incinerators producing

energy report both fossil and biogenic emissions. As illustrated in recent policy reviews, 80 while the

IPCC acknowledges that there are differences between emissions from natural biomass processesand smokestack (or tailpipe) emissions, they also fail to provide guidance on life-cycle analyses and

equivalent emissions reductions measures across all industry sectors. The consequences of enacting

climate legislation without such guidance results in disproportionate financial incentives for

companies to switch from fossil fuels to biomass. While biogenic incinerator emissions are

undercounted, WTE facilities generally claim avoided emissions for offsetting a fossil fuel source.

However, due to the anaerobic conditions in human-created landfills, even the biogenic portions of

methane released are considered anthropogenic emissions.81

Environmental Protection Agency (EPA):Following a court challenge by public interest groups, the

U.S. EPA recently removed a statement from its website that supported biogenic emissions beingcarbon neutral.82 For emissions, the EPA generally follows the EIA definition (below), and has a

hierarchy for suggested waste management that prioritizes source reduction first, recycling and

composting second and disposal in landfills or waste combustors (incinerators) last.83 From


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conversations with EPA officials, there is an ongoing internal debate over how to classify and/or

support MSW waste to energy projects.84

Energy Policy Act of 2005: Energy from MSW is explicitly defined as renewable energy under Section

203, and this general definition has held for most other related federal policies (such as the 2009

American Reinvestment and Recovery Act ARRA). Syngas derived from the biodegradation of MSW(i.e. Landfill Gas) is considered biomass under the BioEnergy program. And under the Renewable

Fuel Program, fuels created from MSW are included. 85

Energy Information Administration: Historically the EIA considered all waste combustion as

renew

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